Judiciary's Interpretation And Enforcement Of FDCPA In Asset Repatriation Case | The Schwarzbaum Compliance Dispute

• Published date: 12 January 2024
• Subject Matter: Litigation, Mediation & Arbitration, Compliance, Trials & Appeals & Compensation
• Law Firm: Freeman Law
• Author: Ms Stephanie Uribe

The United States District Court, Southern District of Florida, presided over by Magistrate Judge Bruce E. Reinhart, encountered a complex legal issue involving Isac Schwarzbaum ("Mr. Schwarzbaum"), who was ordered to repatriate assets to satisfy a significant judgment against him.

The core of the dispute lay in the Repatriation Order (ECF No. 176), directing Schwarzbaum to transfer overseas assets into a U.S. bank account. Schwarzbaum appealed this order (ECF No. 177) and contested the necessity of compliance, citing the absence of a notice under Section 3202 of the FDCPA (ECF No. 191). The case, hinging on the interpretation of a repatriation order and its compliance with the Federal Debt Collection Practices Act ("FDCPA"), raised substantial questions about the enforcement of court orders and the compliance prerequisites.

This article presents a summarized analysis of the decisive legal proceedings regarding the enforcement of a Repatriation Order by the U.S. District Court, Southern District of Florida, and the ensuing discussion regarding adherence to the Federal Debt Collection Practices Act (FDCPA).

On March 29, 2023, the U.S. District Court issued a Repatriation Order against Mr. Schwarzbaum for the repatriation of over $17 million in judgment debts plus post-judgment interest to satisfy the Outstanding Debt of the judgment, ECF No. 176 ("the Repatriation Order"). The order, which demanded compliance by April 28, 2023, was met with an appeal from Schwarzbaum, and a request for a stay was subsequently denied by Judge Bloom on June 8, 2023, thereby enforcing the order. See ECF No. 186.

By September 29, 2023, Schwarzbaum had failed to fulfill the order's requirements, resulting in the U.S. filing a motion for contempt due to non-compliance, suggesting daily fines and potential incarceration. See ECF No. 189. In defense, Schwarzbaum argued that he was awaiting a mandatory notice under Section 3202 of the FDCPA before repatriation, a stance the U.S. rejected, stating the order was preliminary and not contingent on such notice. See ECF No. 192.

Mr. Schwarzbaum argued that he was not in contempt since he is not bound to return the funds until a formal notice is issued by the Court's Clerk pursuant to the FDCPA. The statute stipulates that when the U.S. commences enforcement actions to uphold a judgment, the U.S. legal representative must generate a notice, which is then to be circulated by the court clerk. This notice is meant to alert the debtor of the...